Wrigley classics sag

As part of CEO William Perez's plan to jump-start U.S. sales growth, Wrigley in May introduced flashier packaging and tweaked the formulas for Doublemint, Juicy Fruit, Big Red and other sugared gums. But recent data show the overhaul hasn't stemmed a years-long sales slide for those brands.

The sluggish results reinforce doubts about Wrigley's ability to roll out innovative products to fend off an incursion into its U.S. business from British rival Cadbury PLC. They also fuel concern about the long-term survival of once-popular brands synonymous with the 117-year-old Chicago gum maker, whose $23-billion acquisition by candymaker Mars Inc. is set to close Oct. 6.

"This raises fear that there is nothing Wrigley can do to stem the declines of these brands," says Mitch Corwin, an analyst in Chicago with Morningstar Inc.

The product overhaul encompassed Wrigley's older stick brands, which, save for Extra, are all sugared varieties. The pace of the sales declines has held steady or worsened since the May relaunch, dropping between 17% and 33% in the 12-week period ended Sept. 7, according to data from Chicago-based Information Resources Inc.

The brands account for 30% of Wrigley's U.S. gum sales. Wrigley's North American revenue increased 5% to $474 million for the second quarter, after the company raised prices on most brands, but sales volume fell 5%.

In the past decade, Wrigley shifted its product-development and advertising focus toward newer offerings such as Eclipse, Orbit and 5. But the classic products remain more profitable than newer ones, Mr. Corwin says.

The company hopes a radio and television ad campaign launched in August and laden with new jingles will give the products a boost. But Wrigley cautions that the overhaul will take time to manifest itself, adding that it will continue to invest in the brands.

"We have great confidence (the brands) will contribute to the positive momentum now being generated by the Wrigley U.S. business," a spokesman says in a statement.

Analysts say consumers' preference for sugarless tab or pellet-shaped gums is working against older stick brands, and growth in the gum business depends on concocting new flavors or benefits such as teeth-whitening.

Remaking the classics also puts Wrigley in the sticky spot of having to appeal to younger customers without alienating older ones who have chewed Juicy Fruit or Winterfresh for decades.

"They have made a lot of changes recently, and many of the changes have not worked," says Jim Burns, president of New York-based J. W. Burns & Co., which owns 103,000 Wrigley shares. "The numbers are worrisome."